Ireland pins ME growth plans on dairy demand

By Eliot Beer

- Last updated on GMT

"The Middle East, China and the rest of Asia are major targets – but the Middle East market definitely has a lot more potential for dairy.”
"The Middle East, China and the rest of Asia are major targets – but the Middle East market definitely has a lot more potential for dairy.”

Related tags: Middle east, Milk, Ireland

Ireland is aiming to nearly double its food exports to the Middle East, with a target of more than US$560m by 2020, and is counting on its newly quota-free dairy industry to do it.

Last year Ireland exported around US$315m in food products to the region, up 14% on 2014, according to Michael Hussey, manager for Middle East markets at Bord Bia, the Irish food board. He said the bulk of this trade is made up of milk and dairy products, and he expected dairy to grow even further.

Middle East is key dairy focus

The focus is on building out dairy – I think dairy still has a long way to go. The dairy quotas in Europe ended last March, so Ireland will produce another 50% of milk by 2020 – and all of that will have to be exported outside Europe. The Middle East, China and the rest of Asia are major targets – but the Middle East market definitely has a lot more potential for dairy​,” said Hussey.

He said Ireland’s grass-based dairy herds meant costs were lower than many producers, although he noted New Zealand, another grass-based producer, had an advantage thanks to its large farm sizes. But the current problems in Ireland’s dairy industry – which like others in Europe is beset by low prices – would not impact the long-term potential for the industry, according to Hussey.

Currently market prices are very, very low – farmers in Ireland are only breaking even at best. What that’s going to do the long-term plan to grow the business… I think there will be a lot of expansion. In the medium to long term, dairy consumption will grow: the balance of trade in dairy production is small – only 7% of global dairy production is traded​,” he said, noting that resurgent demand from China could quickly cause demand to rise.

I think the long-term prognosis for dairy is positive. We are competitive – we’re competing in the UAE, we’re competing in Saudi Arabia, which is the big market. A lot of the companies, instead of selling a commodity, are trying to add value – producing blends, infant formula. Infant formula is massive for us – Ireland produces 12% of the world’s infant formula​,” added Hussey.

Aside from dairy, Hussey said the regional demand was for prepared products, such as oven-ready meals. But while there’s potential for the sector to grow, he said logistical issues meant the market for Irish producers may remain limited.

The problem is, there’s very few local producers that can do that – so do you fly in a product that’s oven-ready, and quite voluminous, or do you partner with a local producer, and give them the know-how to add value and produce oven-ready products?​” said Hussey.

Where’s the beef?

Beef, another Irish export staple, is also not widely traded with the Middle East, except for high-end niche providers such as John Stone. Hussey said Irish beef could not be as competitive as meat from Australia or Brazil, making the regional market unattractive to Irish producers.

We’ve only one Halal slaughterer in Ireland currently. The other companies aren’t interested, as the returns in Europe and the UK are better than selling it out here, and competing with the Australians and New Zealanders and Brazilians. You’ve beef coming in here from Somalia, India, Pakistan – you’re just not going to compete if it’s a pure price issue​,” he said. 

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